The passage of the Sabka Bima, Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which raises Foreign Direct Investment (FDI) in insurance from 74% to 100%, marks a significant moment in India’s political economy. While officially framed as a reform to deepen insurance penetration and achieve “Insurance for All by 2047,” the Bill also reflects deeper sociological transformations in how Indian society understands risk, security, and the role of the state.

From a sociological perspective, insurance is not merely a financial product; it is a social institution that mediates uncertainty, distributes risk, and reflects power relations between the state, market, and citizens.

Insurance and the Sociology of Risk

Ulrich Beck’s concept of the risk society is central to understanding the growing importance of insurance. In modern societies, risks such as illness, unemployment, climate disasters, pandemics, and accidents are no longer viewed as fate but as socially produced uncertainties requiring institutional management.

The Indian state’s push for expanded insurance coverage signals an acknowledgment that traditional safety nets—family, community, caste, and informal reciprocity—are weakening under urbanisation, migration, and economic precarity. Insurance emerges as a substitute for eroding social solidarities.

However, Beck also warned that in risk societies, responsibility for managing risk increasingly shifts from the collective to the individual. The Sabka Bima Bill, by opening the sector further to global capital, reflects this transition from state-guaranteed protection to market-mediated security.

From Welfare State to Regulatory State

T.H. Marshall’s theory of citizenship helps contextualise this shift. In the post-independence period, social security in India was closely tied to the welfare role of the state, with public institutions like LIC symbolising collective protection and sovereign trust.

The liberalisation of insurance, particularly the move to 100% FDI, indicates what sociologists call the transition from a welfare state to a regulatory state. Rather than directly providing protection, the state now facilitates markets and regulates private actors through institutions like IRDAI.

The enhanced powers given to IRDAI—search, inspection, seizure, and enforcement—highlight Max Weber’s idea of bureaucratic rational-legal authority. The state withdraws from provision but tightens surveillance and regulation to maintain legitimacy.

Global Capital and Dependency Concerns

From a political economy perspective, critics of the Bill raise concerns reminiscent of dependency theory. Allowing full foreign ownership in insurance raises fears that domestic savings—collected as long-term premiums—may increasingly be controlled by global corporations, potentially prioritising profit repatriation over national developmental goals.

Andre Gunder Frank and Samir Amin warned that excessive reliance on foreign capital can integrate developing economies into global systems in subordinate ways. In insurance, this risk is sociological as much as economic, because insurance funds are not just capital—they are repositories of collective trust and future security.

Trust, Legitimacy, and Public Confidence

Émile Durkheim emphasised that modern institutions function effectively only when supported by moral legitimacy. Insurance, more than many other financial services, depends on trust—trust that claims will be honoured, that contracts are fair, and that institutions will act in times of crisis.

India’s persistent trust deficit in private insurance—driven by mis-selling, opaque terms, and delayed settlements—cannot be solved by capital infusion alone. The creation of a Policyholders’ Education and Protection Fund reflects Durkheimian concerns about sustaining collective confidence in abstract systems.

Anthony Giddens similarly argued that modern societies rely on expert systems, which function only when laypersons trust institutions they do not fully understand. Strengthening regulatory oversight becomes essential when ownership shifts away from nationally embedded institutions.

Inequality, Inclusion, and Uneven Coverage

Pierre Bourdieu’s framework of economic, social, and cultural capital reveals why insurance penetration remains uneven. Urban, salaried, and middle-class groups possess the literacy, documentation, and financial stability required to engage with insurance markets. In contrast, informal workers, migrants, rural households, and gig workers remain structurally excluded.

The Bill’s vision of “Insurance for All” risks becoming aspirational rhetoric unless products are redesigned for low-income groups. Sociologists describe this as stratified inclusion, where access exists in theory but remains inaccessible in practice.

Micro-insurance, parametric insurance, and community-based distribution models are sociologically significant because they recognise that market participation is shaped by social location, not just affordability.

Gender, Family, and Insurance

Feminist sociologists highlight that insurance markets often reproduce existing gender inequalities. Women, especially in informal and unpaid care roles, are less likely to be insured despite facing higher health and life-cycle risks.

Government schemes like PMJJBY and PMSBY attempt to correct this imbalance through subsidised premiums and automatic enrolment via the JAM trinity. From a sociological lens, these schemes represent state-led social engineering, using digital infrastructure to integrate marginalised populations into formal risk pools.

However, critics caution that digital inclusion without social awareness can lead to passive enrolment without meaningful understanding—what scholars term formal inclusion without substantive empowerment.

Insurance as Social Control

Michel Foucault’s concept of governmentality helps explain how insurance operates as a subtle form of social control. By encouraging individuals to insure against illness, accidents, and old age, the state promotes a culture of self-responsibility and risk management.

This does not eliminate inequality but reframes it as an individual failure to plan adequately. The Sabka Bima reform thus aligns with neoliberal governance, where markets discipline behaviour while the state acts as regulator rather than provider.

LIC and the Symbolism of the State

The greater autonomy granted to LIC carries symbolic importance. LIC has historically functioned as a moral economy institution, associated with safety, national development, and social trust. Its continued dominance suggests that despite liberalisation, citizens still value state-backed assurance.

From a Weberian perspective, LIC combines rational-legal authority with charismatic legitimacy rooted in national identity—something private and foreign insurers often lack.

Conclusion: Balancing Markets with Social Protection

The Sabka Bima, Sabki Raksha Bill, 2025 represents a mature but complex phase of India’s financial modernisation. It recognises that managing contemporary risks requires capital, technology, and innovation. Yet sociology reminds us that insurance is not a neutral market good—it is a social contract.

The success of 100% FDI in insurance will depend not only on investment flows but on regulatory strength, trust-building, inclusive product design, and moral legitimacy. Without these, insurance risks becoming another domain where inequality is insured, but insecurity is socialised.

Ultimately, “Sabka Bima” will be meaningful only when risk protection becomes a shared social guarantee rather than a privilege mediated by market capacity.